Introduction for EducatorsTable of ContentsUpdates & Latest AdditionsLearning Pathway: Black Lives MatterLearning Pathway: Influential WomenLearning Pathway: Student RightsLearning Pathway: Election 2020Learning Pathway: Current Events Learning Pathway: Media Literacy Teacher-Designed Learning PlansTopic 1. The Philosophical Foundations of the United States Political System1.1. The Government of Ancient Athens1.2. The Government of the Roman Republic1.3. Enlightenment Thinkers and Democratic Government1.4. British Influences on American Government1.5. Native American Influences on U.S. GovernmentTopic 2. The Development of the United States Government2.1. The Revolutionary Era and the Declaration of Independence2.2. The Articles of Confederation2.3. The Constitutional Convention2.4. Debates between Federalists and Anti-Federalists2.5. Articles of the Constitution and the Bill of RightsTopic 3. Institutions of United States Government3.1. Branches of the Government and the Separation of Powers3.2. Examine the Relationship of the Three Branches3.3. The Roles of the Congress, the President, and the Courts3.4. Elections and Nominations3.5. The Role of Political PartiesTopic 4. The Rights and Responsibilities of Citizens4.1. Becoming a Citizen4.2. Rights and Responsibilities of Citizens and Non-Citizens4.3. Civic, Political, and Private Life4.4. Fundamental Principles and Values of American Political and Civic Life4.5. Voting and Citizen Participation in the Political Process4.6. Election Information4.7. Leadership and the Qualities of Political Leaders4.8. Cooperation Between Individuals and Elected Leaders4.9. Public Service as a Career4.10. Liberty in Conflict with Equality or Authority4.11. Political Courage and Those Who Affirmed or Denied Democratic Ideals4.12. The Role of Political Protest4.13. Public and Private Interest Groups, PACs, and Labor UnionsTopic 5. The Constitution, Amendments, and Supreme Court Decisions5.1. The Necessary and Proper Clause5.2. Amendments to the Constitution5.3. Constitutional Issues Related to the Civil War, Federal Power, and Individual Civil Rights5.4. Civil Rights and Equal Protection for Race, Gender, and Disability5.5. Marbury v. Madison and the Principle of Judicial Review5.6. Significant Supreme Court DecisionsTopic 6. The Structure of Massachusetts State and Local Government6.1. Functions of State and National Government6.2. United States and Massachusetts Constitutions6.3. Enumerated and Implied Powers6.4. Core Documents: The Protection of Individual Rights6.5. 10th Amendment to the Constitution6.6. Additional Provisions of the Massachusetts Constitution6.7. Responsibilities of Federal, State and Local Government6.8. Leadership Structure of the Massachusetts Government6.9. Tax-Supported Facilities and Services6.10. Components of Local GovernmentTopic 7. Freedom of the Press and News/Media Literacy7.1. Freedom of the Press7.2. Competing Information in a Free Press7.3. Writing the News: Different Formats and Their Functions7.4. Digital News and Social Media7.5. Evaluating Print and Online Media7.6. Analyzing Editorials, Editorial Cartoons, or Op-Ed Commentaries
6.9

Tax-Supported Facilities and Services

Standard 6.9: Tax-Supported Facilities and Services

Give examples of tax-supported facilities and services provided by the Massachusetts state government and by local governments. (Massachusetts Curriculum Framework for History and Social Studies) [8.T6.9]

Tax The Rich
"Tax The Rich" mural by Megan Wilson on Clarion Alley, San Francisco California, licensed under CC BY-SA 3.0

In 1789, a few months before his death, the American revolutionary Benjamin Franklin wrote to his friend and French scientist, Jean-Baptiste Le Roy, “Our new Constitution is now established, everything seems to promise it will be durable; but, in this world, nothing is certain except death and taxes" (Benjamin Franklin's Last Great Quote and the Constitution, Constitution Daily, November 20, 2020).

This standard explores how state and local governments use taxes to provide services and facilities for people. A tax is a fee or a charge that people have to pay. To understand what services you are entitled to receive as a member of a state or local community, it is essential to understand how state and local governments use tax monies, including how public education is funded.

Debates over tax policy tend to focus on whether to implement a more progressive tax system, which relies on those who earn more income to pay more tax, or to maintain a mainly regressive tax system which is uniformly applied, such as a sales tax or a lottery, that results in those with a lower income paying more of their income in taxes.  

    1. INVESTIGATE: People’s Taxes and How They Are Spent

    Massachusetts collected $27.8 billion in taxes in 2018. A billion is a thousand million. How big is a billion?  If you saved $100 a day, it would take you 27,397.26 years to reach $1 billion (UC Berkeley Museum of Paleontology, nd).

    In Fiscal Year 2021, the federal government collected $3,863 trillion in taxes (U.S. Government Tax Revenue). A trillion is a million, million; one trillion seconds equals 31,546 years (How Big is a Trillion?).

    Sources of Revenue

    State and local governments in Massachusetts get tax revenue from multiple sources as shown in Table 6.9 (Learn more: The State of the State (and Local) Tax Policy).

    Table 6.9 Sources of Revenue for State and Local Government

    State Government

    Local Government

    property taxes

    individual income taxes

    corporate income taxes

    sales taxes

    motor vehicle license taxes

    marijuna sales taxes* 

    other assessments

    funds from state and federal government

    local property taxes

    individual income taxes

    charges for services such as water and sewer

    parking meter fees

    corporate taxes

    hotel taxes

    business license taxes

    *Massachusetts gained a new source of tax revenue when the first legal recreational marijuana stores opened in the state in November, 2018. Marijuana has been legal for purchase by people 21 and older in Massachusetts, under certain conditions, since 2016 (Marijuana in Massachusetts--What’s Legal?). Marijuana sales are subject to taxation.

    To explore marijuana taxation, read What is Massachusetts Planning To Do with All That Marijuana Tax Revenue?, Boston.com, December 5, 2018 and Weed Taxes Roll into Massachusetts, WBUR, July 8, 2019.

    By 2021, every state except Nebraska and Idaho have legalized marijuana in some form. You can explore state-by-state policies with this interactive map.

    Areas of Spending

    In Massachusetts, and in most state and local governments, spending falls into one of six broad categories: elementary and secondary education, public welfare, higher education, health and hospitals, police and corrections, and highways and roads (State and Local Expenditures, Urban Institute).

    Explore How Are My State Taxes Spent? to see how much money is typically spent on the following services:

    Paying for Schools

    “Education is the only area where the state tells cities and towns how much to spend on a local function. We don’t tell cities and towns how much to spend on a local fire department or on their public works department” (Jeff Wulfson, Massachusetts Department of Elementary and Secondary Education quoted in Toness, 2019, para. 7).

    Massachusetts uses a formula to determine what it thinks communities need to pay for the expenses of K-12 education—everything from teacher salaries to books and curriculum materials to the costs of maintaining school buildings. This is called the foundation budget. The current foundation budget is $11,448 per student multiplied by the number of students in the school district. The foundation budget is the minimum amount that must be spent. State and local governments pay their share of the foundation budget based on a complicated formula.  

    Cities and towns may spend more than the foundation budget, but they have to raise that money themselves through local taxes. As a result, wealthier communities, if they choose to do so, can raise more money through taxes and spend more money on education than poorer communities. According to Boston Magazine, in 2017, Cambridge, Weston, Dover-Sherborn and Watertown spent more than $20,000 per pupil while Haverhill, Lowell, Malden and Taunton were some of the communities spending less than $14,000 per pupil.

    Suggested Learning Activities

    • Research & Design
      • Did you know that more money is spent on nuclear weopons than foreign aid? More money is spent on disaster recovery rather than climate change investments. The average U.S. taxpayer worked 63 days to fund military spending by the U.S. government. Explore the site: Where Your Tax Dollar Was Spent in 2018.
      • Create a public service announcement (PSA) video or podcast about a taxpayer issue of your choosing. 

    Online Resources for Government Spending and School Funding

    2. UNCOVER:  A Brief History of Taxation in the U.S.

    In the article, "The History of Taxes in the U.S.," Fontinelle (2019) noted that "most of the taxes we pay today have been around for less than half of the country’s history" (para. 2). The modern estate tax appeared in 1916; the federal income tax was established by the 16th Amendment in 1916; West Virginia established the first sales tax 1921; social security taxes were first collected in 1937.

    Poster: Votes for Women

    Poster Declaring Women Who Pay Taxes Want Votes Too (1913)
    Image on Wikimedia Commons/Public Domain

    Types of Taxes

    Broadly speaking, Americans pay seven different types of taxes (Hess, 2014):

    While everyone pays taxes, the richest Americans pay the least, concluded economists Emmanuel Saez and Gabriel Zucman (2019). While all income groups pay about 28% of their income in taxes, the very top earners - billionaires or the 400 wealthiest individuals - pay only 23%. Corporations pay a 21% tax rate. You can track the accumulation of wealth at The World’s Real-Time Billionaires from Forbes.

    People Filling Tax Forms 1920

    People filling out tax forms in Internal Revenue office, 1920
    (Credit: Library of Congress/Public Domain)

    The Constitution gives Congress the power to tax and spend, otherwise known as the “power of the purse.” 

    The Internal Revenue Service (IRS) is the nation’s tax collection agency. Following the passage of the 16th Amendment, it was originally known as the Bureau of Internal Revenue, and renamed the Internal Revenue Service in 1952. 

    Once tax money is collected, the Federal Government engages in two types of spending: Mandatory Spending (required spending for programs such as Medicare, unemployment, social security and interest on the national debt) and Discretionary Spending (all the other spending that is requested by the President and approved by the Congress).  Military spending now accounts for almost 60% of all discretionary spending and the rest goes to education, transportation, housing, energy, environment, food, agriculture and everything else. 

    Progressive and Regressive Taxation

    At the center of discussions about taxes are the terms Progressive Taxes and Regressive Taxes. The progressive income tax was institutionalized by the 16th Amendment to the Constitution in 1913. Under a progressive income tax system, the more money a person makes doing work, the more money that person owes in taxes.  

    Much of the Massachusetts tax system is regressive, not progressive. Regressive taxes, such as sales taxes, force those with the least money to contribute a higher percentage of their total income to cover taxes. For example, Mary has a weekly salary of $300 and Julie has a salary of $1,500, but both pay a $6 sales tax on their $100 grocery bill. Mary pays 2% of her weekly salary in taxes while Julie only pays 0.4% of hers (Why the Sales Tax is Considered a Regressive Tax, AccurateTax, 2017). Similar to sales taxes, property taxes, payroll taxes, and excise taxes all require lower-earning individuals and families to pay a higher percentage of their income in taxes.

    The Massachusetts income tax is somewhat less regressive in nature. Since everyone pays Massachusetts income taxes at a flat rate, lower-income households pay less than do higher-income households. 

    Nationally and at the state level, there are calls for establishing more fair and equitable tax policies by increasing taxes on the wealthiest individuals and families. New York State extended its “millionaire tax” through 2024. Under its millionaire tax, those making more than one million dollars a year pay taxes at a higher rate than everyone else.

    Noting that the richest 130,000 families now have nearly as much wealth as the bottom 117 million families combined, 2020 Presidential candidate Elizabeth Warren proposed an “Ultra-Millionaire Tax” that would place additional taxes on those making more $50 million a year. Presidential candidate Bernie Sanders also proposed a Tax on Extreme Wealth as part of his 2020 campaign.

    Racial and Gender Bias in the Tax System

    Racial and gender bias is built into the U.S. Tax system, notes reporter Clark Merrefield in a post for The Journalist's Resource, a blog from the Shorenstein Center on Media, Politics and Public Policy at Harvard University. In theory, everyone's tax bills are unrelated to their race, ethnicity, or gender. No law states that a White American can pay less taxes because they are White.

    In practice, however, deductions (a reduction in amount of income to be taxed) and exclusions (income that is not taxed) result in significant savings ($489 billion in 2016) for those who qualify for them; and those who qualify are disproportionately White households. Federal tax deductions and exclusions include home mortgage interest, state and local taxes, charitable contributions, tax-exempt bonds, life insurance exclusion, pension exclusion, capital gains exclusion, home sales exclusion, and estate set-up exclusion.

    Many of these deductions and exclusions are out the reach of low-income individuals and families. One is less likely to make charitable donations, for example, if one is struggling to make enough money to live at or just above the poverty line. There is a enormous wealth gap in U.S. society in which White Americans have 10 times the wealth of Black Americans and 8 times that of Latina/o Americans (Brown, 2021, p.18). Economist Dorothy A. Brown (2021) concluded that across all income levels, Black Americans "are paying more taxes than white Americans because our tax laws were designed with white Americans in mind" (p. 21). 

    Suggested Learning Activity

    Online Resources for Taxes and History of Taxation

    3. ENGAGE: Should States Expand Lotteries to Raise Money for Communities?

    A lottery is a drawing of lots (tickets with numbers) in order to award prizes to individuals who have paid money to buy chances to win. Forty-eight governments (45 states plus the District of Columbia, Puerto Rico and the U.S. Virgin Islands) operate lotteries. Massachusetts began its lottery in 1972; MegaMillions started in 2000 and Powerball in 2010. By law, youngsters under 18 years old cannot buy lottery tickets, although adults can purchase them for minors as gifts.

    6.9.4_Lottery_Logo.png
    Image on Wikimedia Commons/Public Domain

    Lotteries have been part of American society since colonial times. Massachusetts had the first authorized lottery in Boston in 1745; 25,000 tickets were sold. Rhode Island soon did the same, starting their first lottery to build a bridge over the Weybosset River in Providence. You can learn more at Colonial America Lotteries from The Ephemera Society of America. 

    Lotteries generate huge sums of money for state governments. One study found that Americans spent $71,826,670 on lotteries in 2017 or about $220 for every individual in the country. While the average American spends $288 on lottery tickes, Massachusetts residents spent the most money of any state in the nation; about $933 per person annually, more than $300 more than people in Rhode Island, the next highest state (Jacoby, 2021, p. K5). Five percent of the state's people said they play the lottery everyday ("These 22 States Love Playing the Lottery the Most," July 28, 2020).

    Proponents contend lotteries provide needed revenue for cities and towns since state governments do redistribute some of the money they take in from lottery sales as prizes for winners and financial support for local communities. In Massachusetts, 72% of lottery revenue is paid out in prizes (most states pay out less); 8% goes to cover operating expenses; and the remaining 20% is returned to cities and towns throughout the state (Massachusetts State Lottery Commission, 2019).

    Opponents of lotteries question whether the money goes to the communities that need it the most (How to Fix the Unfair Distribution of Revenue Collected by the Massachusetts State Lottery, 2018). There is also deep concern that lotteries promote an addiction to gambling since it is so easy to purchase tickets at stores. There are also equity issues since households in the lowest income brackets (making $30,000 or less a year) spend significantly more lottery tickets than those earning higher incomes ($75,000 a year and up).

    Media Literacy Connections: Advertising the Lottery

    A lottery is a game of chance. Players are not guaranteed to win; in fact, hardly anyone ever does. The thrill that keeps people playing and paying is the hope that "today might be your lucky day" - the time when it all comes together and you win big money with its accompanying celebrity status.

    Louisiana State Lottery Drawing 1887
    "1887 advertising flier for the semi-annual Louisiana State Lottery drawing at New Orleans, 14 June. Artwork shows a boy and girl with coins and banknotes, presumably to symbolize the schoolchildren the lottery was advertised as benefiting."
    Public Domain

    Lotteries are a form of regressive taxation where lower-earning individuals spend a higher percentage of their incomes on games of chance in which they have little opportunity to earn back what they spend. A few people do win large amounts of money, but the likelihood is extremely small. The chance of winning a Mega Millions jackpot is about 1 in 302.5 million; the odds of being struck by lightning are only 1 in 500,000. 

    Massachusetts_lottery_ticket_1744
    "A ticket from the first public lottery in Massachusetts" | Public Domain

    You can review the math for the odds in Mega Millions in this graphic from the Florida Lottery.

    You can learn more about lotteries as a form of taxation at Progressive, Proportional and Regressive Taxation.

    Activity 1: Analyzing Lottery Advertisements

    • Examine online and print advertisements for Mega Millions and your own or neighboring state lotteries.
      • For a primary source to analyze, here is the home page for the Massachusetts Lottery and its promotions.
      • What do you notice about how lottery advertisements use words, numbers, and graphics to encourage people to play?
      • Where do you see advertisements for the lottery: sporting events, city billboards, diners, particular television shows, certain websites, other locations? Why do you think the lottery has chosen to places to advertise?
      • What visual and textual techniques do they use to persuade people to buy lottery tickets?
    • Design your own advertisement to convince people not to spend their money on lottery tickets - use the same techniques you discovered during your assessment.

    Activity 2: Informing People About Their Chances

    While psychologists recommend that people only bet what they can afford to lose on lottery tickets and other games of chance, some individuals spend money recklessly in hope of winning big.

    • Create a series of TikTok or Snapchat videos to inform people about their odds in winning a lottery.
    • Include alternative investment strategies where individuals might get a higher return on the money they are spending on lotteries every year.

    Suggested Learning Activities

    • Research & Discuss
      • Examine the mathematics of lotteries, probabilities, and games of chance with the Local Lotto Curriculum at the City Digits website developed by Laurie Rubel and her team at Brooklyn College.
      • After examining the mathematics of lotteries, discuss whether you will buy lotto tickets when you turn 18 years old.
    • Design an Infographic
      • Display the probabilities of winning a lottery versus other likely and unlikely events (e.g., getting eaten by a shark!).
    • Discuss & Debate
      • Are Lotteries an effective public policy?  
      • Why do Massachusetts people spend the most on lotteries of any state in the nation?
      • How should states distribute the money from lottery sales?

    Online Resources for Lotteries

    Standard 6.9 Conclusion

    Taxes and how state and local governments spend them were the focus of this standard. INVESTIGATE examined what taxes people pay and how some of those funds are used to support public education. UNCOVER reviewed the history of taxation, including progressive and regressive taxation. ENGAGE asked whether lotteries are a fair and sensible way to raise money for communities.